Is the Net Fiscal Burden a Good Measure of its Economics Impact on the Welfare of the Native-Born Population?
Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR)
Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
CESifo Working Paper Series No. 1273
Migration of young workers (as distinct from retirees), even when driven in by the generosity of the welfare state, slows down the trend of increasing dependency ratio. But, even though low-skill migration improves the dependency ratio, it nevertheless burdens the welfare state. Recent studies by Smith and Edmonston (1977), and Sinn et al (2003) comprehensively estimate the fiscal burden that low-skill migration imposes on the fiscal system. However, an important message of this paper is that in an infinite-horizon set-up, one cannot fully grasp the implications of migration for the welfare state just by looking at the net fiscal burden that migrants impose on the fiscal system. In an infinite-horizon, overlapping generations economy, this net burden could change to net gain to the native-born population.
Number of Pages in PDF File: 14
Keywords: migration, welfare state, fiscal burden
JEL Classification: H0working papers series
Date posted: October 7, 2004
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